China's Fuel-Demand Growth May Decline to 4% as Economy Slows

By Winnie Zhu

Oct. 15 (Bloomberg) -- China's fuel-demand growth may ease to an average 4 percent in the next two to three months as a slowing economy cuts consumption, said an official with the research unit of the nation's largest oil company.

Fuel consumption growth may also fall because of higher domestic gasoline and diesel prices, Gong Jinshuang, an engineer at CNPC Research Institute of Economics and Technology, said by telephone in Beijing today. Fuel demand has climbed by about 5.5 percent in the first eight months from a year earlier, Gong said.

China, the world's second-largest energy user, raised fuel prices by as much as 18 percent on June 20 to reflect production costs and conserve energy use. The Chinese economy expanded 10.1 percent in the second quarter, the slowest pace since 2005, as the global economy stalled.

The world's fourth-biggest economy is likely to expand only 9.5 percent in the third quarter, the slowest pace since 2004, Morgan Stanley estimates. UBS AG reduced its estimate for China's growth in 2009 to 8 percent from 8.8 percent.

China's crude-oil demand may rise 5 percent to 8.4 million barrels a day in 2009, the International Energy Agency said Oct. 10. The adviser to 28 nations lowered its forecast for global oil demand next year by 0.5 percent to 87.2 million barrels a day as the worst financial crisis since the 1930s threatens a worldwide recession.

CNPC Research Institute is the think tank of China National Petroleum Corp., parent of the Hong Kong-listed PetroChina Co.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net.